Key facts:
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According to the trader, 66% of the path to the bull run is already completed.
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Bitcoin exchange balance favors Willy Woo’s optimism.
The recovery of the price of bitcoin (BTC) in the last two weeks occurs amid changes in its market that show a more favorable scenario than the one experienced in the last 5 months.
In one investigation In this regard, analyst Willy Woo points out that until the beginning of August there was a temporary bearish influx in the market. He bases this on the increase in exchanges of the spot bitcoin balance suggesting selling pressure, as well as the “paper” bitcoin balance, reflecting increased speculation. However, as the chart shows, these decreased later.
The pink line shows the balance of spot and paper bitcoin. Source: Willy Woo.
It should be noted that the term “spot” refers to the balance of investors in the digital currency, while “paper” refers to the one they record in derivatives such as futures of bitcoin. That is why they work as indicators of market movements.
“The price drop in early August caused a lot of ‘paper’ bitcoin to be sold off with a good round of liquidations,” Woo explained. In fact, this is reflected in the disappearance of open interest, which shows the value invested in derivatives, as seen below.
Open value in bitcoin. Source: Willy Woo.
“This is a healthy restoration of open value (paper bets),” the analyst said. The reason is that “it is really difficult for BTC to rise when there is overheated speculation in the market,” he explained. Therefore, he is optimistic about the decline in derivatives investment.
According to his vision, should the price action get really boring and the “commercial casino” disappears so that bitcoin can then rise. Along these lines, he considers that the market has already traveled 66% of this path, since much of the speculation has gone, but not so much BTC spot as shown by the green line in the first graph.
In this sense, he believes that the factors that will enable a bull run for bitcoin will soon align. From the point of view of supply and demand, he sees that there has been a recovery from a short-term downward trend to a delicate neutrality, which is one step closer to an optimistic sentiment.
Bitcoin is in a very long price consolidation
As far as the long term goes, Woo emphasizes that the good news is that Bitcoin is not in a bear market, but rather in a very long consolidationIn fact, as CriptoNoticias reported, the currency is going through its longest period in history. consolidating its historical highs of the previous cycle (six months).
Bitcoin price so far in 2024. Source: TradingView.
According to the investment company Capriole Investmentes, this moment of consolidation is comparable with the performance of gold in 2008, which culminated in an upward breakout. This process, which took nine months, occurred prior to the launch of its exchange-traded funds (ETF) in the United States, instruments that debuted with bitcoin this year.
According to the analysis company Alfa Bitcoin, the digital currency could have an upward impact in the next 30 daysThe reason behind this is that it will then be 150 days since the halvinga period after which in recent cycles it has experienced an upward effect.
In addition, the reduction of interest rates In the United States, September is expected to trigger a rotation from Treasury bonds to risk assets. It is also during this month that the northern hemisphere’s autumn season begins, a season in which markets tend to rise, which makes for a better scenario for bitcoin towards the end of the year.
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